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23/11/23
12:26
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Originally posted by Scott th Ratbag:
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"The Gov is going to announce their plan to underwrite new generation using auctions and "contract for difference" by expanding the Capacity Investment Scheme." . ....... interesting news pugsley.... I've never understood contracts for difference. I read about it as I was learning market trading years ago but thought it was just another gamble and I was interested in investment. so how does this work? and what would be the implications/benefits for, as eg, a battery storage manufacturer? despite the sporadic but continuing uptake of Li batteries, storage remains in its infancy in Aus. other countries are far advanced on our trajectory and no clear sign of improvement under the current Gov. yet storage is the key to making renewable energy sustainable. imo Gov needs to get hard on the accelerator and invest heavily in energy storage. particularly promoting community microgrids.
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so how does this work? Something like this. They run an auction ad respondents put in their bids. Any resultant project contract has a floor price and a ceiling price. If market prices go below the floor price the operator can call on the Government to make up the difference. If the market price goes above the ceiling the operator owes the Government money.